E-commerce

Part of a series on
E-commerce
Online goods and services
E-books Software Streaming media
Retail services
Banking DVD-by-mail Flower delivery Food ordering Pharmacy Travel
Marketplace services
Advertising Auctions Comparison shopping Social commerce Trading communities Wallet
Mobile commerce
Payment Ticketing
Customer service
Call centre Help desk Live support software
E-procurement
Purchase-to-pay

Electronic commerce, commonly known as E-commerce or eCommerce, is trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle, although it may also use other technologies such as e-mail.

E-commerce businesses may employ some or all of the following:

• Online shopping web sites for retail sales direct to consumers
• Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales
• Business-to-business buying and selling
• Gathering and using demographic data through web contacts and social media
• Business-to-business electronic data interchange
• Marketing to prospective and established customers by e-mail or fax (for example, with newsletters)
• Engaging in pretail for launching new products and services

Timeline

A timeline for the development of e-commerce:

• 1971 or 1972: The ARPANET is used to arrange a sale between students at the Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology, later described as "the seminal act of e-commerce" in John Markoff's book What the Dormouse Said.^[1]
• 1979: Michael Aldrich demonstrates the first online shopping system.^[2]
• 1981: Thomson Holidays UK is first business-to-business online shopping system to be installed.^[3]
• 1982: Minitel was introduced nationwide in France by France Télécom and used for online ordering.
• 1983: California State Assembly holds first hearing on "electronic commerce" in Volcano, California.^[4] Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.)
• 1984: Gateshead SIS/Tesco is first B2C online shopping system ^[5] and Mrs Snowball, 72, is the first online home shopper^[6]
• 1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada. It is the first comprehensive electronic commerce service.^[7]
• 1984: California becomes first US state to enact an Electronic Commerce Act defining basic consumer rights online.
• 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.^[8]
• 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website (www.books.com) selling books online with credit card processing.
• 1992: St. Martin's Press publishes J.H. Snider and Terra Ziporyn's Future Shop: How New Technologies Will Change the Way We Shop and What We Buy.^[9]
• 1993: Paget Press releases edition No. 3 of the first AppStore, The Electronic AppWrapper ^[10]
• 1994: Netscape releases the Navigator browser in October under the code name Mozilla. Netscape 1.0 is introduced in late 1994 with SSL encryption that made transactions secure.
• 1994: Ipswitch IMail Server becomes the first software available online for sale and immediate download via a partnership between Ipswitch, Inc. and OpenMarket.
• 1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase.^[11]
• 1995: The US National Science Foundation lifts its former strict prohibition of commercial enterprise on the Internet.^[12]
• 1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, Product Manager for CompuServe UK, from W H Smith's shop within CompuServe's UK Shopping Centre is the UK's first national online shopping service secure transaction. The shopping service at launch featured W H Smith, Tesco, Virgin Megastores/Our Price, Great Universal Stores (GUS), Interflora, Dixons Retail, Past Times, PC World (retailer) and Innovations.
• 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24-hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
• 1996: IndiaMART B2B marketplace established in India.
• 1996: ECPlaza B2B marketplace established in Korea.
• 1996: Sellerdeck, formerly Actinic, the UK's first PC/LAN e-commerce platform established.
• 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.^[13]
• 1999: Alibaba Group is established in China. Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
• 2000: The dot-com bust.
• 2001: Alibaba.com achieved profitability in December 2001.
• 2002: eBay acquires PayPal for $1.5 billion.^[14] Niche retail companies Wayfair and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
• 2003: Amazon.com posts first yearly profit.
• 2004: DHgate.com, China's first online b2b transaction platform, is established, forcing other b2b sites to move away from the "yellow pages" model.^[15]
• 2007: Flipkart is established in India. Business.com acquired by R.H. Donnelley for .$345 million.^[16]
• 2009: Zappos.com acquired by Amazon.com for $928 million.^[17] Retail Convergence, operator of private sale website RueLaLa.com, acquired by GSI Commerce for $180 million, plus up to $170 million in earn-out payments based on performance through 2012.^[18]
• 2010: Groupon reportedly rejects a $6 billion offer from Google. Instead, the group buying websites went ahead with an IPO on 4 November 2011. It was the largest IPO since Google.^[19][20]
• 2011: Quidsi.com, parent company of Diapers.com, acquired by Amazon.com for $500 million in cash plus $45 million in debt and other obligations.^[21] GSI Commerce, a company specializing in creating, developing and running online shopping sites for brick and mortar businesses, acquired by eBay for $2.4 billion.^[22]
• 2013: US eCommerce and Online Retail holiday sales reach $46.5 billion, up 10 percent.^[23]
• 2014: Overstock.com processes over $1 million in Bitcoin sales.^[24] India’s e-commerce industry is estimated to have grown more than 30% from 2012 to $12.6 billion in 2013.^[25] US eCommerce and Online Retail sales projected to reach $294 billion, an increase of 12 percent over 2013 and 9% of all retail sales.^[26] Alibaba Group has the largest Initial public offering ever, worth $25 billion.

Business applications

Some common applications related to electronic commerce are:

• Document automation in supply chain and logistics
• Domestic and international payment systems
• Enterprise content management
• Group buying
• Print on demand
• Automated online assistant
• Newsgroups
• Online shopping and order tracking
• Online banking
• Online office suites
• Shopping cart software
• Teleconferencing
• Electronic tickets
• Social networking
• Instant messaging
• Pretail

Governmental regulation

In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive.^[27] Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information.^[28] As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.^[29]

There is also collaboration between Google and US federal authorities to block illegal online pharmacies from appearing in Google search results.^[30] Recently FedEx Corporation pleaded not guilty to charges made against it regarding dealing with illegal online pharmacies.^[31]

Conflict of laws in cyberspace ^[32] is a major hurdle for harmonisation of legal framework for e-commerce around the world. In order to give a uniformity to e-commerce law around the world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996) ^[33]

Internationally there is the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies.

There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region.

In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce,^[34] and the Australian Competition and Consumer Commission^[35] regulates and offers advice on how to deal with businesses online,^[36][37] and offers specific advice on what happens if things go wrong.^[38]

In the United Kingdom, The Financial Services Authority (FSA)^[39] was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct Authority.^[40] The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009. The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD requires the European Commission to report on the implementation and impact of the PSD by 1 November 2012.^[41]

In India, the Information Technology Act 2000 governs the basic applicability of e-commerce. It is based upon UNCITRAL Model but is not a comprehensive legislation to deal with e-commerce related activities in India. Further, e-commerce laws and regulations in India ^[42] are also supplemented by different laws of India as applicable to the field of e-commerce. For instance, e-commerce relating to pharmaceuticals, healthcare, traveling, etc. are governed by different laws though the information technology act, 2000 prescribes some common requirements for all these fields. The competition commission of India (CCI) regulates anti competition and anti trade practices in e-commerce fields in India.^[43] Some stakeholders have decided to approach courts and CCI against e-commerce websites to file complaint about unfair trade practices and predatory pricing by such e-commerce websites.^[44][45]

Forms

Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.

On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce.

Aside from traditional e-Commerce, m-Commerce as well as the nascent t-Commerce^[46] channels are often seen as the current 2013 poster children of electronic I-Commerce.

Global trends

In 2010, the United Kingdom had the biggest e-commerce market in the world when measured by the amount spent per capita.^[47] The Czech Republic is the European country where ecommerce delivers the biggest contribution to the enterprises´ total revenue. Almost a quarter (24%) of the country’s total turnover is generated via the online channel.^[48]

Among emerging economies, China's e-commerce presence continues to expand every year. With 384 million internet users, China's online shopping sales rose to $36.6 billion in 2009 and one of the reasons behind the huge growth has been the improved trust level for shoppers. The Chinese retailers have been able to help consumers feel more comfortable shopping online.^[49] China's cross-border e-commerce is also growing rapidly. E-commerce transactions between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade ^[50] In 2013, Alibaba had an e-commerce market share of 80% in China.^[51]

Other BRIC countries are witnessing the accelerated growth of eCommerce as well. Brazil's eCommerce is growing quickly with retail eCommerce sales expected to grow at a healthy double-digit pace through 2014. By 2016, eMarketer expects retail ecommerce sales in Brazil to reach $17.3 billion.^[52] India has an internet user base of about 243.2 million as of January 2014. Despite being third largest userbase in world, the penetration of Internet is low compared to markets like the United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point. In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities.

E-Commerce has become an important tool for small and large businesses worldwide, not only to sell to customers, but also to engage them.^[53][54]

In 2012, ecommerce sales topped $1 trillion for the first time in history.^[55]

Mobile devices are playing an increasing role in the mix of eCommerce. Some estimates show that purchases made on mobile devices will make up 25% of the market by 2017.^[56] According to Cisco Visual Networking Index,^[57] in 2014 the amount of mobile devices will outnumber the number of world population.

Impact on markets and retailers

Economists have theorized that e-commerce ought to lead to intensified price competition, as it increases consumers' ability to gather information about products and prices. Research by four economists at the University of Chicago has found that the growth of online shopping has also affected industry structure in two areas that have seen significant growth in e-commerce, bookshops and travel agencies. Generally, larger firms are able to use economies of scale and offer lower prices. The lone exception to this pattern has been the very smallest category of bookseller, shops with between one and four employees, which appear to have withstood the trend.^[58]

Individual or business involved in e-commerce whether buyers or sellers rely on Internet-based technology in order to accomplish their transactions. E-commerce is recognized for its ability to allow business to communicate and to form transaction anytime and anyplace. Whether an individual is in the US or overseas, business can be conducted through the internet. The power of e-commerce allows geophysical barriers to disappear, making all consumers and businesses on earth potential customers and suppliers. eBay is a good example of e-commerce business individuals and businesses are able to post their items and sell them around the Globe.^[59]

Distribution channels

E-commerce has grown in importance as companies have adopted pure-click and brick-and-click channel systems. We can distinguish pure-click and brick-and-click channel system adopted by companies.

• Pure-click or pure-play companies are those that have launched a website without any previous existence as a firm.
• Bricks-and-clicks companies are those existing companies that have added an online site for e-commerce.
• Click-to-brick online retailers that later open physical locations to supplement their online efforts.^[60]

Examples of new E-commerce system

According to eMarketer research company, "by 2017, 65.8 per cent of Britons will use smartphones". (cited by Williams, 2014)

Bringing online experience into the real world, allows also the development of the economy and the interaction between stores and customers. A great example of this new e-commerce system is what the Burberry store in London did in 2012. They refurbished the entire store with numerous big screens, photo-studios, and also provided a stage for live acts. Moreover, on the digital screens which are across the store, some fashion shows´ images and advertising campaigns are displayed. (William, 2014) In this way, the experience of purchasing becomes more vivid and entertaining while the online and offline components are working together. Another example could be Kiddicare smartphone app, in which costumers can compare prices against adversaries. Moreover, the app allows people to know where the sale products are and to check whether the item they are looking for is in stock or if they have to ask for it online without going to the `real´ store. (William, 2014) In the United States, Walmart app in which you can check the product availability and prices both online and offline. Moreover, you can also add to your shopping list items by scanning them, see their details and information, and check purchasers´ ratings and reviews.

See also

References

Further reading

External links

Wikibooks has a book on the topic of: The Information Age

• E-Commerce and E-Business at Wikibooks
• Small Business E-Commerce Resources, US: SBA .
• Williams, G. (2014) E-commerce is history. WIRED [Online] Available from: http://www.wiredevent.co.uk/Wired_content/uploads/2014/07/retail.pdf [Accessed: 6 December 2014]
• Top 6 eCommerce Trends That Will Dominate 2015, Konstant Info .